Pay for Potential

It’s a common practice at many companies to pay new employees a lower rate during an initial probationary training period than they will be earning after they are fully trained and, presumably, autonomous. The thought behind this is that a new employee must spend some arbitrary period of time proving his/her worth to the company before being paid for their future, ie potential, worth.

When I worked for a large, corporate coffee company in the early 2000’s, I was a store manager for a time. I used this practice of hiring people at a lower rate than I would be paying them once they were fully trained. Upon discovering this, my District Manager, a man I have written about elsewhere, questioned me. He asked why I would pay someone less than I hired them to be worth.

I explained the logic behind my methods. I told him that I was paying them for their present worth as a trainee, which was less than they would be worth to my team and the company once they were fully trained, at which time their pay would increase as promised. He asked, “Why don’t you pay them based on the potential value you see in them? Why don’t you give them what they will be worth once they are fully trained? Set the standard high and then make sure they live up to that standard by training them. Don’t waste everyone’s time by playing games. Hire good people, train them well, and pay them what you believed they would be worth when you interviewed them.”

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